USD/JPY Weekly Price Forecast – US Dollar Continues to Rally On Higher Yields

The US dollar initially pulled back during the trading week to test the ¥105 level before rallying yet again based upon higher interest rates coming out the United States. That being said, the market is likely to see a lot of volatility due to the fact that the 10 year note is all over the place. This pair is sensitive to the differential between yields of the two countries on the 10 year note more than anything else, so it does make sense that we will continue to see it grind higher with the higher yields coming out of America. At this point, I do believe that we go looking towards the ¥108 level, possibly even the ¥110 level over the next several months.

USD/JPY Video 01.03.21

The Japanese yen will continue to lose luster against most currencies, especially if we are starting to see the “reflation trade” take hold of the narrative yet again. With that being the case, the market is likely to see dips as buying opportunities, especially after forming such an impressive bullish candlestick. With this being the case, think it is only a matter of time before we do break higher, and I remain bullish as long as we can stay above the ¥104 level. Breaking down below there would be a structural failure, and therefore would have a lot of people running for the hills as it were. I do not necessarily think that this is going to be easy to hang onto, but if you keep your leverage low and simply pay attention to the “big picture”, you should do okay.

For a look at all of today’s economic events, check out our economic calendar.